Embezzlement and Ponzi Schemes

While combatting larger scale international and domestic fraud schemes targeting the elderly, the department has prosecuted those who have abused their fiduciary responsibilities to exploit the elderly.

For example, in April, the U.S. Attorney’s Office for the Northern District of California charged a Santa Clara insurance broker with mail and wire fraud in connection with an alleged attempt to steal more than $1 million dollars from a client widow’s trust account.  The indictment alleges that although the defendant had a fiduciary duty to manage and oversee his client’s account, he allegedly withdrew almost $1.5 million from that account and deposited it into an account that he controlled and used for his own personal benefit.  See www.justice.gov/‌usaousao-ndca/pr/santa-clara-insurance-broker-charged-wire-fraud-and-mail-fraud-alleged-theft-widow-s.

Likewise, in February 2015, in the District of Maryland, Travis Wetzel, a branch operations manager for an investment advisory firm, was sentenced to 42 months in prison for embezzling over $1 million from an elderly client’s annuity account.  Over a two-year period, as a FBI investigation revealed, Wetzel took money from his client’s account without the client’s knowledge and used the money for his own personal benefit.  He also laundered a portion of the money by transferring it to other bank accounts he controlled.  Wetzel knew his client was elderly and was able to repeatedly embezzle the funds due to his client’s age and physical condition.  In particular, the victim was isolated and potentially suffering from cognitive impairments.  In addition to incarceration, the court also ordered Wetzel to forfeit and pay restitution of $1,282,224.

Additionally, in January 2015, in the Middle District of Florida, Donald Ray Babb and Ralph Victor Ruth were sentenced to 121 months in prison for their role in a scheme to defraud elderly investors from 2006 to 2013 out of $18 million.  In that matter, an FBI investigation revealed that Babb and Ruth falsely represented that their businesses were licensed financial institutions whose deposits were insured by the FDIC.  They advertised risk-free certificates of deposit (CD) investment opportunities which yielded high rates of return.  However, neither Babb nor Ruth ever purchased a CD for an investor.  Instead, they used the money to make payments to earlier investors in the scheme, and to purchase real estate and other luxury items for themselves.  As a part of their sentences, the court also ordered the forfeiture of their interests in various pieces of real property, which were traceable to proceeds of the offense, and restitution in the amount of $9.7 million.